(Image source from: Thehansindia.com)
Four months after the United States enforced a 50 percent tax on most goods from India, Mexico has decided to implement taxes of up to 50 percent on certain items imported from Asian nations, including India and China.
These taxes, intended to safeguard local industries and producers, will begin on January 1, 2026. Mexico will impose charges on items like car parts, small vehicles, clothing, plastic items, steel, home appliances, toys, textiles, furniture, shoes, leather products, paper, cardboard, motorcycles, aluminum, trailers, glass, soaps, fragrances, and beauty products, according to El Universal, a newspaper in Mexico. Countries without a trade agreement with Mexico, such as India, South Korea, China, Thailand, and Indonesia, will be affected.
The Mexican government aims to lessen its dependence on imports from Asian countries, particularly China, with which it faces a large trade deficit. On Thursday, China stated that it has "always opposed one-sided tariff increases of any kind" and called on Mexico to "correct its improper practices of unilateralism and protectionism soon." China will feel the most impact, as Mexico imported $130 billion worth of goods from China in 2024. The suggested tariffs are also anticipated to raise additional income of $3.8 billion (around Rs 33,910 crore). Mexican President Claudia Sheinbaum aims to enhance protection for the national industry and boost local production. "We believe that backing [Mexican] industry will create jobs," said Deputy Ricardo Monreal, the leader of Morena in the Chamber of Deputies, according to mexiconewsdaily.com. However, analysts from the Mexican economic news source El Financiero think the tariffs are meant to satisfy the US ahead of the review between the United States, Mexico, and Canada.
The Mexican tariffs will impact $1 billion in shipments from major Indian car manufacturers like Volkswagen, Hyundai, Nissan, and Maruti Suzuki, as reported by Reuters. The tax on cars will increase from 20 percent to 50 percent, significantly affecting India's top vehicle exporters. "The planned tax increase is expected to directly influence Indian car exports to Mexico...we request the Government of India to assist in engaging with the Mexican authorities," the industry group communicated to the commerce ministry before the tax was finalized. Mexico stands as India's third-largest car export destination, following South Africa and Saudi Arabia.
